Contents of a business plan
Introduction
Executive summary
- What is the business?
- What is the market?
- What is the potential for the business?
- Forecast profit figures
- Funding requirements
- Prospects for the investor/ lender
Description of the business
What is the business?
- A brief description of the business idea and why it should be a success
- History of the enterprise and its ownership
- Information about the entrepreneur’s qualifications, experience and financial status
- Location
Products and services
- A description of the product and what it does
- An explanation of ways in which the product is distinctive and unique
- Analysis of the competition
- How the product will be developed and what new products are being considered as replacements
- Intangible assets & protection (e.g. copyright, trade marks)
The market
- Size and expected growth of the market
- Analysis of market by segments
- Identification of target segments
- Competitors - who they are, ownership, size, market share, likely response to the challenge
- Customers (existing & potential) - who they are, how they buy, why they buy
- Distribution channels
Situational audit (where are we now?)
This involves data collection and analysis
Purpose of data collection and analysis:
- Determine which opportunities to pursue
- Identify SWOT
- Identify competitive advantages
- Provide a background for the formulation of strategy
Main analytical techniques:
- PEST/ PESTLE analysis
- SWOT analysis
- Competitor analysis
- Marketing audit
Statement of aims and objectives (where do we want to go?)
- A statement of what the business should achieve over a five year period
- Aims should be expressed in terms of hierarchy of objectives becoming progressively more detailed and specific
- Vision - what the organisation will be like in the future
- Mission statement - a statement of the overall purpose and aims
- SMART Objectives - quantitative goals.
- Functional objectives - objectives for the functional areas
Strategy and tactics
- How are we to get there?
- Strategy is the broad approach to the achievement of objectives
- Summarises how to fulfil the objectives
- Tactics refer to the details of the strategy e.g. the promotional mix
- The detail will be contained in programmes and budgets
Marketing: key questions to be answered
- Who are our customers?
- Who are our competitors?
- What is the size and growth rate of the market?
- How is the market segmented?
- What is special about our product or service?
- What are our competitive advantages?
- What is our marketing strategy?
Marketing plan
- Market research
- Segmentation and targeting
- Detailed outline of the product or service
- Unique selling points
- Chosen pricing strategy
- Promotional plans
- Distribution strategy (including online)
- Customer service strategy
Operations plan
- Physical location
- The production process
- Facilities
- Equipment
- Scale & location of operations
- Capacity - potential and effective
- ICT strategy
- Engineering and design support
- Materials required
- Inventory levels and stock control plans
- Purchasing arrangements
- Sources of supply of key resources
- Quality control plans
- Staffing requirements
Management and organisation
- Organisational chart
- Details of senior management
- Corporate governance
- Staffing requirements
- Key personnel
- Recruitment and selection
- Training
- Rewards (financial & non-financial)
- Labour relations
- Employment and related costs
Forecasts in the business plan
- Sales forecast
- Forecast profit and loss account (income statement)
- Cash flow forecast (cash budget)
- In each case this should be a month by month forecast for a minimum of two years
- Forecast balance sheet for each of the first two years
- The assumptions behind the forecast should also be included
Financial data
- Investment appraisal - payback and discounted cash flow
- Break even analysis
- Evaluation criteria for performance review
- Ratio analysis: net profit margin, Gross profit margin, return on capital employed, liquidity and solvency analysis
Financing required
- Details of capital required and uses
- The plan must include details of the external finance required
- This will be equal to the finance required less finance raise internally from existing owners and from operations
- The plan will outline how it is proposed to raise the finance
- Sources of finance: Short, medium and long term; Debt v equity
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